Private Equity

Optimize spend across portfolio companies with specialized private equity procurement consulting services from Valorant

PRIVATE EQUITY FIRMS FACE NUMEROUS CHALLENGES IN THEIR EFFORTS TO CREATE VALUE THROUGH PROCUREMENT

  • Over the last decade, Private Equity firms are increasingly leveraging Procurement efficiencies to enhance portfolio valuations. By generating short-term savings as well as creating sustainable long-term value, Procurement has proved to be an effective contributor to Return on Investment (ROI) improvements of PE investments. Implementing best-in-class Procurement techniques to achieve quick savings and boost EBIDTA, however, is inherently challenging for PE firms. Their unique spend profile spread across several portfolio companies operating in multiple industries adds complexities to leveraging cross portfolio collective spend for Procurement benefits. Some of the major Procurement challenges faced by PE firms are summarized below:

Key Procurement Challenges Faced by PE Firms

Lack of visibility into spend as
Inability to effectively leverage aggregate spend
Lack of collaboration
Resistance from vendors

VALORANT’S SPECIALIZED PRIVATE EQUITY PROCUREMENT CONSULTING SERVICES HELP PE FIRMS TO EFFICIENTLY NAVIGATE THROGH COMPLEXITIES TO BOOST ROI & ENHANCE VALUATIONS

  • Valorant is experienced in working with PE firms and their portfolio companies to implement proven Procurement strategies in a challenging PE environment. We understand the complexity of portfolio-wide spend aggregation and other unique challenges faced by the industry. Our experience enables us to design tailored Procurement strategies suited to your portfolio companies and management structure to help you get closer to your target ROI faster. Our services delivered in a comprehensive and agile approach ensures that our clients maximize savings and enhance valuations in an expedited timeline.
  • Here is an overview of Valorant’s specialized Procurement services for Private Equity:
  • 1) Spend Analysis : The first step towards unlocking Procurement benefits is to get comprehensive visibility of the spend. Typically, the quality of spend data at portfolio companies is below par, is spread across multiple systems and is unsatisfactorily categorized. A spend analysis program can help harmonize categories and taxonomies across portfolio companies and allow the management to get a holistic view of the aggregate spend. Subsequently this data can be used to derive actionable business insights, uncover hidden savings opportunities and direct the overall Procurement strategy for the PE firm.

  • 2) Portfolio-wide Spend Aggregation and Formulation of Procurement Strategy: Valorant works closely with the leadership of all portfolio companies to identify spend areas which can be sourced collectively. Typically, categories such as Travel, Office Supplies, IT Telecom, Car Rental etc. can often be easily aggregated. The aggregated spend can then be sourced by implementing the most suitable strategies including:

  • Suppliers can sometimes be reluctant to work in a cross-portfolio environment due to concerns around ownership stakes and the extent of the PE firm’s influence on company management. Valorant is experienced in drafting and negotiating equitable terms in the contract to assure fair deal for suppliers even as the PE firm continues to add new investments to the portfolio as well as make exits.

  • 3) Opportunity Assessment and Implementation for Portfolio companies: Our team of consultants are experienced in applying strategic Procurement principles to companies of all sizes. We work with individual portfolio companies to identify savings opportunities through spend analysis, contract analysis and stakeholder interviews. We understand that time is critical for all PE investments and follow an expedited approach for opportunity identification and execution. After a quick opportunity assessment, our team launches a rapid sourcing program wherein high value contracts are renegotiated and spend is consolidated to key suppliers to achieve quick bottom-line savings. Additionally, to capture incremental value, market bidding (RFP) and demand management projects for pertinent categories are launched simultaneously to get competitive rates, optimize consumption and gain additional leverage on incumbent suppliers. A $400MM PE-owned insurance company achieved 7% savings on their third party spend in just 6 months with Valorant.

  • 4) Pre-Deal Due Diligence: Often, Procurement efficiencies are a major rationale for the deal and accurate savings potential is critical to ascertain fair valuation. We work with both buy side and sell side PE firms to identify Procurement savings in an accelerated timeline which is critical for such transactions. In case the deal goes through successfully, we also work with the buyer to execute savings opportunities to capture value quickly.

  • 5) Mergers, Acquisitions and Carve Out Support: We work with private equity companies to realize Procurement benefits during the integration phase of an M&A transaction. Our team understands the importance of time and follows a rapid sourcing methodology to quickly deliver savings to help our clients meet all their savings goals based on 100 day, 6 months and 1-year plans. In the case of carve-outs, where a client buys a business unit from a larger company, we help our clients in setting up a best-in-class Procurement function at the standalone firm which is functional from Day 1 to maximize value capture potential

  • With years of experience, Valorant helps PE firms simplify Procurement with a structured approach. Our comprehensive Procurement services focusing on both company specific and cross portfolio strategies helps PE firms boost EBIDTA and enhance valuations.

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